Belousov announced the approach of the “perfect storm” in the global economy

The world economy in the next few years will enter a period of a “perfect storm” as a result of a “collision” of three crisis trends, Andrei Belousov, head of the Russian delegation at the summit and First Deputy Prime Minister of the Russian Federation, told reporters at the Asia-Pacific Economic Cooperation (APEC) summit in Bangkok.

According to Belousov, at the last meeting, the APEC leaders agreed that the world economy is entering a period of severe shocks, and only all states will be able to get out of them together. The Deputy Prime Minister noted the speech of the head of the IMF, Kristalina Georgieva, who spoke about the problems and restrictions that the world economy is currently facing.

“It is striking that we are now only entering the understanding of the problems that are emerging in the world. The next few years, it will be a period of a perfect storm, when trends that have been accumulating for a long time collide over a limited time period,” Belousov said.

The head of the Russian delegation listed three trends in the global crisis.

“The first such trend is, of course, the growth of world trade protectionism and the blocking of rules that are associated with the WTO,” he said, pointing out that dispute resolution bodies “virtually stopped working”, and in recent years between the largest powers – the United States and China – there were trade wars.

The second factor that is superimposed on protectionism, Belousov called the debt overhang, It “should have dissipated after the crisis of 2009, but has not gone away” and now, according to the Deputy Prime Minister, blocks inflation suppression tools – a significant increase in interest rates and tightening monetary policy.

“It is clear why. Because a sharp increase in interest rates will lead to a sharp increase in the cost of servicing and repaying debt, which can lead to a chain of bankruptcies of the largest banks, ”Belousov said, adding that in a negative scenario, the IMF expects about 30% of the global banking system to enter the crisis zone.

The third trend is associated with rising prices, which began at the end of 2020, when metals rose sharply in price, Belousov noted. In addition, there was a “tenfold” increase in gas prices, which led to an increase in the cost of electricity and practically blocked the “development or even the very existence of enterprises and entire industries.”

“Metallurgy, which is one of the most energy-intensive industries, was hit, and, most dangerous of all, the production of mineral fertilizers. Further down the chain, the reduction in the production of mineral fertilizers caused an increase in prices for mineral fertilizers and, of course, could not but affect the grain markets and the prospects,” said the head of the delegation.

As a result, such turbulence has led the markets into a strong movement, which is “chaotic and uncertain” in nature, Belousov concluded.